Why did Puritans in England reject fiction?Is it simply because it is seen as entertainment and, therefore, a distraction from dedication one's...

I think that the sub-question is on the right track.  In
my mind, the Puritans eliminated fiction because it took effort away from the singular
worship of the divine.  The Puritans' focus in their writing was on the worship of God. 
Anything that embraced any other ends was seen as a distraction from this element,
confirmation of the human condition of original sin.  In order to counteract this, total
and steadfast worship of the divine was needed.  This can be seen in the cultural
writings of the Puritans, where reverence of the Bible drove all.  At the same time,
sermons were considered some of the finest literary examples of Puritan writing.  In
this light, fiction would be seen as something "lesser" than the pursuit of the sacred
and divine.  The literary culture and tradition of the Puritans precluded anything other
than the religious being revered in their writing.